5 Best SaaS Pricing Models That Drive Growth
- Nerea O
- Oct 30
- 5 min read
SaaS pricing models vary depending on the offer provided for each model. Pricing is vital because it shapes how customers see your product, the revenue coming in, and determines the growth of your business. Choosing a wrong pricing can be detrimental to you and your SaaS business because it will lead to you struggling to retain customers, losing confidence, and missing out on opportunities.
Many users today are well-acquainted with pricing and want flexible, clear prices that match the value they get. As a SaaS business owner, you need to deeply understand pricing and the different models as well as how they impact "a customer's product use."
This article will explore the best 5 SaaS pricing models, highlighting the benefits for each model.
Hybrid Model
SaaS Hybrid Model integrates a range of pricing strategies, which brings a flexible and dynamic approach to SaaS companies. The model merges unique pricing architectures like subscription and usage-based pricing, per-user access and feature-based pricing, and freemium and Tiered pricing to meet the needs of diverse customers and attract different market prices.
With the SaaS hybrid pricing model, companies can offer key services at different price points seamlessly. They are also able to customize plans to customer usage and organizational architecture.
Why is Hybrid Model among the best?
Hybrid pricing model allows SaaS companies to maximize revenue potential. How so? A company can earn from both recurring base fees and usage spikes or premium features. Customers who consume more products, pay more while customers who mildly use available products contribute through subscriptions.
Additionally, the SaaS hybrid pricing model attracts a broader audience. Different customers have unique needs and budgets that the hybrid model fills. Its flexibility allows customers to choose the budget they can afford and get their product of choice in one place.
It is the best pricing model to reduce churn because clients are less likely to drop-off if they are able to adjust their plan through upgrade, downgrade or switch to usage-based pricing.
You can read more about “Examples of Successful Hybrid SaaS Models.”
Tiered Pricing Model
SaaS Tiered pricing is the most common model that many businesses use today to set their product prices. The model consists of a range of packages, offering a unique set of benefits at different price points. The benefits may include features, supported users, storage space, computing resources accessible concurrently, and other benefits offered by different SaaS companies.
Companies may choose to have three or more different pricing tiers for their model. A company may have a Basic, Advanced, Pro, and Enterprise level package.
Each package will have unique features, customer support, and service performance levels. The Basic plan will have limited resources than the other packages in the tier, but at a lower price. Advanced, Pro, and Enterprise plans will have additional resources than the Basic plan, but can only be accessible at a higher price than the Basic plan.
Why is the Tiered Pricing Model among the best?
Tiered pricing model allows users to choose the plan that fits their budget. The best part of it is that it can improve conversion rates for SaaS companies.
This model enables subscribers to predict the amount of money they will need to pay for your services.
As a business owner, you will be able to accurately predict expected revenue and cash flow over a specific period. This will help you manage your resources while growing your SaaS business.
It also matches pricing to value given that each plan is unique to cater to different buyer personas. This allows you to appeal to a wide range of markets, budgets and use cases simultaneously.
Here are SaaS companies that use a tiered pricing model. “Which SaaS Companies Use Tiered Pricing?”
Freemium Pricing Model
The freemium pricing model offers users free access to a SaaS product. However, the user will not enjoy all resources as paid users because the free product is not fully functional.
A user can only have limited access to features, product usage, support, and storage space. If a user wants to access premium features and unlimited usage, they will have to upgrade to a paid plan.
Why is the Freemium Pricing Model among the best?
Freemium products can quickly gain popularity because these products are free and get caught up in the "word-of-mouth" strategy.
Freemium allows low customer acquisition costs because your current users will promote your product for you, leading to getting new customers at zero cost.
It promotes a large user base where you will increase the user population quickly. This strategy is essential for products that depend on network effect, such as, networks, messaging apps, or e-commerce marketplaces.
This article will help you identify “SaaS companies with successful freemium strategies.”
Usage-based Pricing Model
This pricing model is unique and might be most preferred by users with a fixed budget at their early stages of using your product. It allows customers to be charged based on how much they use the product. There is no flat subscription fee tapped on the product, in this case, at the end of each billing cycle.
Why is Usage-based Pricing Model among the best?
This model is open to all users and easy to adopt, allowing new customers to get started at low cost and then increase their product usage as their business grows.
It enhances better customer satisfaction because the pricing structure adapts to the changing needs of the customers.
Additionally, the usage-based pricing model is effective for customer retention because customers have control over their subscription costs.
Customers on usage-based pricing subscriptions are more likely to upgrade their plans as their product adoption progresses, leading to a smooth account expansion.
Explore “Examples of usage-based pricing in SaaS.”
Per-user Pricing Model
The per-user pricing model charges customers based on the number of users available in their team and would want to access your product. It is a direct approach, suitable for collaboration and productivity tools. Per-user fee is calculated by multiplying the rate by the number of active user accounts.
Why is the Per-user Pricing Model among the best?
It is simple and predictable in the sense that both the SaaS company and customer can easily understand and predict costs and revenue.
It promotes scalable revenue because once the customer's business grows and increases their employee count, the SaaS provider's revenue will automatically increase.
Conclusion
These are the most common and best SaaS pricing models that many companies have adapted in their pricing structure. Before choosing a pricing plan, take your time to explore each model and see which plan fits your business needs.
SaaS Pricing models offer an amazing approach to boost the growth of your company and in turn provide flexible product prices to your customers. Your business growth means your customer’s business success.
Why not adapt a pricing plan that will not only benefit your growth but also your customer’s business success?
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